Although accidents and injuries happen, their costs can be staggering for a business. The 2017 report on non-fatal injuries by Liberty Mutual revealed that companies spent a mind-blowing $60 billion on direct compensation for workers each year.
The costs of auto accidents, meanwhile, turn out to be significantly higher than initially thought. Motus reported that, in 2017, vehicle crashes cost nearly $60 billion for employers. About 40% of these accidents were workplace-related.
Why Costs Are High
What causes this insanely huge amount of accident- or injury-related costs? These factors may explain the reason:
1. Missed Work
More severe accidents, including vehicle crashes, result in missed work. According to the Bureau of Labor Statistics, this alone could already be worth over $1 million weekly for businesses. The direct costs are around $39,000. These are expenses that go toward the hospitalization and treatment of employees.
Indirect costs add not less than 70% of the total costs. For one, the company’s productivity declines when an employee is absent. To compensate, the employer may need to appoint another worker to do the injured person’s job. It may result in higher costs of training or labor.
2. Increased Insurance Premium
Insurance rates for company-owned vehicles often increase over time to account for inflation, depreciation, and age of equipment, among others. Usually, it rises by 23%.
However, the Motus report showed that a vehicle accident could increase insurance premiums by 33%. Companies, therefore, add at least $350 to their insurance payments each year.
Unlike regular vehicles, those used by businesses often carry higher insurance premiums. One, most are large, like trucks or vans. Second, they are used more frequently and, thus, have a higher chance of meeting an accident or experiencing faster depreciation.
3. Replacement or Repair of Damaged Equipment
Companies also need to spend on either replacement or repair of the damaged equipment. Several reports already shared that the average cost of a truck repair has been increasing over the years.
The roadside mechanical repair of a top-performing vehicle, which met only one breakdown, was already $334. More severe accidents could result in a totaled truck or car, where repair costs are much higher.
How to Reduce Accident Costs
Fortunately, work-related accident and injury costs are mostly controllable. Companies may also receive compensation beyond their insurance:
1. Help the Employee File a Personal Injury Claim
Many work-related accidents occur at no significant fault of the employee. For those operating in California, they can approach a personal injury attorney to file a claim against the other party.
The company cannot ask for compensation on behalf of the business, but it can support the employee throughout the process. Not only does this show that the company truly cares for the welfare of its people, but it also boosts the morale of the remaining workers. It will then result in higher engagement and productivity and loyalty.
2. Improve Their Mileage Reimbursement Program
Contrary to popular belief, companies that maintain a fleet don’t have to reimburse drivers for the mileage they covered. However, many do for two reasons. One, it helps retain and attract employees, especially since looking for excellent drivers is tough and expensive. Second, the IRS doesn’t consider it as additional income and is, therefore, not taxable.
Currently, the standard mileage rate is over $0.55 per driven business mile, but the employer can provide an amount lower or higher than this. Either way, Motus recommends implementing both fixed and variable rates for its reimbursement program.
These rates are according to work trips and miles covered. In turn, employers reimburse only those miles driven during working hours.
3. Continuously Upgrade and Train Workers
Industry standards and trends change over time, and employees may become more overconfident or less cautious while on the job. Constantly upgrading and retraining workers can thus help reduce safety risks.
Many accidents and injuries can affect the company’s bottom line. Not only does it hurt profits, but it also threatens the business’s ability to support its employees in many ways. While nothing guarantees these problems won’t occur, employers can control the likelihood.